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Apple dismisses DOJ's proposed e-book penalties as 'a draconian and punitive intrusion' - Page 3

post #81 of 121
So Apple has found a way to keep profits offshore and legally avoid being taxed. Is there some way Apple can move their ebook business offshore as well, and legally avoid regulation by the U.S. government (or any unfriendly government)? In other words, shut down their ebook business in the U.S. and direct those sales to another Apple entity located in another nation. Haven't some internet gambling sites taken a similar approach?

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post #82 of 121
Quote:
Originally Posted by jungmark View Post

That's cool, so let's ask Jobs what he thought/meant. Oh, he's gone. So was this under oath? Oh, no.

It wasn't a parable. It was plain English that even a 1st grader would understand.
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post #83 of 121
Hey Frood,

A better analogy is Amazon sells a 50000 ford for 35000, undercutting every ford dealership thus obtaining a 90% market share. Apple said "hey Ford, we'll let you sell ford at 50000 as long as we get 30%. We also want to be able to match a competitor's price if you let them sell for less. " more dealerships begin to appear as now they can compete and make money.
post #84 of 121
Quote:
Originally Posted by dasanman69 View Post

It wasn't a parable. It was plain English that even a 1st grader would understand.

It doesn't matter. There's a little legal terminology called 'hearsay'. Hearsay is normally not admissible unless it meets one of the exceptions (and I don't think this statement does).

It appears that the DOJ realized that it was inadmissible, too, and chose not to try to use it:
http://forums.appleinsider.com/t/156322/notes-from-steve-jobs-biographer-will-not-be-used-in-doj-e-book-case-against-apple
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post #85 of 121
Quote:
Originally Posted by brutus009 View Post

If they have to terminate their current contract and cannot create a new one for 5 years, then wouldn't they be unable to sell any books from those publishers for those five years?  If I understand this correctly, wouldn't that effectively force Apple to call the entire e-book market a big loss?  Someone please correct me if I am wrong.

What about my iBook collection?  How does this help consumers?  If I understand this correctly, the DOJ very nearly wants Apple to remove itself from the e-book market, and I don't understand how that can be in anyone's best interest... except for Amazon.

They can still sell books using the agency model, I believe that the MFN clause has been tossed out for now.
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post #86 of 121
Quote:
Originally Posted by jragosta View Post

It doesn't matter. There's a little legal terminology called 'hearsay'. Hearsay is normally not admissible unless it meets one of the exceptions (and I don't think this statement does).

It appears that the DOJ realized that it was inadmissible, too, and chose not to try to use it:
http://forums.appleinsider.com/t/156322/notes-from-steve-jobs-biographer-will-not-be-used-in-doj-e-book-case-against-apple

It would've been hearsay if Mossberg claimed SJ said so and so without adequate substantiation, but we can hear the question asked and the answer given. We don't know for sure what SJ meant but what counts in a civil case is what he most likely meant.
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post #87 of 121
Quote:
Originally Posted by dasanman69 View Post

It would've been hearsay if Mossberg claimed SJ said so and so without adequate substantiation, but we can hear the question asked and the answer given. We don't know for sure what SJ meant but what counts in a civil case is what he most likely meant.

Nope. It's still hearsay since he can't be cross-examined.
"Three tests are calculated to expose possible weaknesses in a statement:
Assertions must be taken under oath
Assertions must be made in front of the tribunal (judge or jury)
Assertions must be subject to cross-examination.
Assertions not subject to these three tests are (with some exceptions) prohibited insofar as they are offered testimonially (for the truth of what they assert)."

http://en.wikipedia.org/wiki/Hearsay_in_United_States_law
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post #88 of 121
Quote:
Originally Posted by jragosta View Post

Nope. It's still hearsay since he can't be cross-examined.
"Three tests are calculated to expose possible weaknesses in a statement:
Assertions must be taken under oath
Assertions must be made in front of the tribunal (judge or jury)
Assertions must be subject to cross-examination.
Assertions not subject to these three tests are (with some exceptions) prohibited insofar as they are offered testimonially (for the truth of what they assert)."

http://en.wikipedia.org/wiki/Hearsay_in_United_States_law

So if a dying person tells a police officer who killed him/her that would be inadmissible because that person can't be cross examined on what he meant?
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post #89 of 121
Quote:
Originally Posted by dasanman69 View Post

So if a dying person tells a police officer who killed him/her that would be inadmissible because that person can't be cross examined on what he meant?

No. That's one of the exceptions. There are something like half a dozen major exceptions to the hearsay rule and deathbed statements are one of them.

The presumption is that in a situation like the one you've outlined that you're not likely to lie. Still, a jury or judge may give it less weight than a statement made under oath and where the person can be cross-examined.

The following lists the major hearsay exceptions:
http://www.courts.state.nh.us/rules/evid/evid-804.htm
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post #90 of 121
Quote:
Originally Posted by dasanman69 View Post


They can still sell books using the agency model, I believe that the MFN clause has been tossed out for now.

 

Well, moreover, Apple can just use the wholesale model. Then, if Amazon is selling a loss leading ebook, Apple could do the same. Not good news for the publishers or content providers, but for Apple I don't think that it's that big of deal to do that.

 

The anti-trust oversight over music, movies, other digital content, and the suspension of the agency fee for IAP for ebooks (and possibly over the other content since the DOJ is crossing the rubicon with ebooks) on the other hand, that's pretty devastating for Apple's platform. That will be going to the SCOTUS if the lower court approves of that.

post #91 of 121

Apple still has to go through it's appeals. Apple followed exactly what Amazon did to build it's book business. Only to be wrongly accused of starting some kind of fixing of prices which in reality it didn't do any of that and testimony was even put out there that proved that. But when the DOJ paid off the judge of course she already had her mind made up before the trial even began. Hopefully an appeals judge won't be tempted with bribes and will actually look at the facts this time.

As far as the DOJ with there penalty. They really stretch things way to far even as to monitor or intervene in Apple's music and video sales which has absolutely nothing to do with this books case. So draconian is an understatement in my opinion. 

post #92 of 121

It is my understanding that this is Apple's official response, as posted on their website, and Tim Cook has been extremely upfront on his feelings in the matter.

 

Or has he?

 

Check out the first letter of each paragraph.

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post #93 of 121
Quote:
Originally Posted by GTR View Post

It is my understanding that this is Apple's official response, as posted on their website, and Tim Cook has been extremely upfront on his feelings in the matter.



Or has he?

Check out the first letter of each paragraph.

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post #94 of 121
Quote:
Originally Posted by Tallest Skil View Post

That's pretty awesome. Where'd you find it? My first thought was Scoopertino, but it wasn't them. lol.gif

Although this is an official Apple statement (cough, cough), I cannot reveal its source, other than making the following statement:

I am the Batman.
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post #95 of 121
Actually it may not be a bad thing for Apple. Why selling books at a lost? Let Amazon sell books on iPad. The more books Amazon sells, the more loss it made for Amazon. It actually will eat into Amazon and B&N tablet shares. Government is always doing dumbest things/opposite effect.
post #96 of 121
Frood your iCars story want a lovely little venture into your mind but last I checked Amazon were the completion. So in a free market (I assume America still is) surely you under cut your competitors. So your argument does not make sense. So i thought i would tell a little story about a board meeting in (lets say Carzone) the current market leaders office that occured when they heard about iCars.

Boss: We could charging $ 52000 as well and take a 30% cut. That gives us much more profit than our current method of cutting prices to the bone and it will put us in better favour with the car manufacturers who have started to complain we under sell their cars just to become the market leader.

Bright spark in the meeting: Aren't we supposed to compete?

Boss: Yes but only if we are found out and then we can blame iCars for changing the sale method.

Bright spark protest: Surely it would be easier just to take a smaller margin and so undercut iCars like we do with everyone else?

Boss: Yes but this way we can stop iCars for intruding into our market at the same time if we can convince people they clouded to fix prices.

Bright spark: How, they did not say we had to charge the same as them.

Boss: You and I know that but thre government doesn't and unless they have us bugged I'm not going to tell them. We can just let then see what they want to see which is the largest company in the e commerce market discussing with their supplier about what price they would like to sell their cars at through iCars and let the government draw their own conclusions. They are so fixated with market forces they will forget other people sell cars and scream price fixing. After the dust settles we can sweep in and take over the market and then charge what we want. That's who's the smart people price fix legally and get rid of the competition.

Bight spark: oh I see. That's why your the boss. Are you sure this will work surely the government aren't that stupid.

Boss: no but their cash strapped, in a hole and desperate. That can colour your judgent some what. Why would we care anyway, if iCars take their business elsewhere no one hear will lose their jobs and its one less competitor. It's all good as far as I can see.
post #97 of 121
Sorry about the typos in my little story. Typing on an ipad one handed quickly does tend to leave a few in. It will give you a chuckle anyway. See how many you can spot!
post #98 of 121

I said this before, Apple should just get out of consumer ebooks. IF they really want to prove their point, I see no better way than to leave publishers, B&N and Amazon to their own cesspool. DOJ want to see how fast Amazon will kill publishing, this is the way to go!!! DOJ does not understand the complicity of publishing and businesses in general. Apple's iPad is a content device and most recent data shows not many actually read ebooks on their iPads anyway (thought I have seen plenty). Regardless, getting out is a good way to stick it to DOJ and watch them mob the floors after Amazon tanks publishing further.

post #99 of 121
Quote:
Originally Posted by anantksundaram View Post

So what?

 

Assuming (perhaps I am being kind here) you understand the basics of how the legal system works out here...

 

So... they need to be seen to be willing to negotiate an appropriate penalty for being found guilty even while they are appealing?

 

If they don't then they'll be treated as hostile and antagonistic and will get stiffed.  And if they they lose their appeal, which seems at the very least plausible if not likely, then they look like morons.

 

Explain to me where my misunderstanding of the legal system "out there" lays. 

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post #100 of 121
Quote:
Originally Posted by Crowley View Post

So... they need to be seen to be willing to negotiate an appropriate penalty for being found guilty even while they are appealing?

If they don't then they'll be treated as hostile and antagonistic and will get stiffed.  And if they they lose their appeal, which seems at the very least plausible if not likely, then they look like morons.

Explain to me where my misunderstanding of the legal system "out there" lays. 

FWIW Apple is negotiating the penalties. They've made their own offer which includes independent monitoring for compliance, restrictions on what they can share with partners and dropping the "most-favored nation" clause from contracts. The AI article may have (intentionally) left the impression that Apple was being arrogantly dismissive of the DoJ settlement suggestions but that's not the case. This article just didn't bother spelling out Apple's counter proposal. They aren't being the "antagonistic" or "hostile" party you're suggesting IMHO.

It's not unusual for some authors to leave out parts of a story to make them more dramatic. This is one of them.
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post #101 of 121
Quote:
Originally Posted by Gatorguy View Post


FWIW Apple is negotiating the penalties. They've made their own offer which includes independent monitoring for compliance, restrictions on what they can share with partners and dropping the "most-favored nation" clause from contracts. The AI article may have (intentionally) left the impression that Apple was being arrogantly dismissive of the DoJ settlement suggestions but that's not the case. This article just didn't bother spelling out Apple's counter proposal. They aren't being the "antagonistic" or "hostile" party you're suggesting IMHO.

 

Ok, well if that's true then that's fair enough.  I think the AI article portrayed their response as being very antagonistic and hostile, but if that was a misrepresentation on AI's part, then no matter.

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post #102 of 121
The End.
Edited by GTR - 8/3/13 at 6:29am
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post #103 of 121
Quote:
Originally Posted by jungmark View Post

Hey Frood,

A better analogy is Amazon sells a 50000 ford for 35000, undercutting every ford dealership thus obtaining a 90% market share. Apple said "hey Ford, we'll let you sell ford at 50000 as long as we get 30%. We also want to be able to match a competitor's price if you let them sell for less. " more dealerships begin to appear as now they can compete and make money.

 

A good argument- but it is backwards.  The DOJ is not responsible for ensuring profits in an industry are so high that many people choose to enter it.  I do not make PC's for a living, because prices are too low and I don't believe I could make a lot of money doing it.  Is it the DOJ's job to go after PC manufacturers and ensure they drive prices way up so that I can start making them?  No.

 

PC's have open standards that have driven prices way down and many people who used to make PC's no longer do.  They could not compete.

 

Amazon makes money selling ebooks.  They do sell some titles below cost.  That is allowed.  Amazons prices are low and many people are finding they do not want to or simply can not compete.  That is fine.  They hypothetically proposed danger often used is that Amazon would eliminate all competition and then jack book prices sky high with their monopoly.  The problem with that argument is that

1) it did not happen and 2) it could not happen.  That scenario only can occur in industries with high barriers to entry-like Steel or semiconductor manufacturing. 

 

If Amazon did mysteriously jack prices up overnight:

 

1)  It would likely be much much less than 30%- so even if they did it would be more beneficial to consumers than the market under Apples scheme.

2)  If they did raise their prices the DOJ and consumers would be all over them immediately

3)  With no barriers to entry, if prices were higher, anyone with server infrastructure could immediately get back in the business

 

Apple's scheme was implemented- and prices jumped 30% overnight for the exact same product.

The DoJ stepped in.

What happened to the ebook market? Is it collapsing?  No, competition is actually growing and prices have actually come down to below the starting point.  Google books is becoming a player.  Apple books is a player and even making money selling titles for $7.99  Are all these companies competing to see who can lose the most money?  Nope.  They are making money.  Obviously Apple would be much happier to game the system and charge consumers nearly double that, but they got caught and thwarted.

 

I do think the DOJ's proposed terms are overreaching.  They need to determine damages (and it is substantial- driving prices up 30% for the entire book market for a substantial period is not a small thing).  The DOJ could opt to triple damages because the intent was willful- but I think even that would be borderline.  The other option would be to allow the doors to swing open and let states and consumers sue individual or via class action similar to what they did with tobacco companies. 

 

Telling Apple how to run their business is overreaching.  Telling them they can't engage in certain behaviors is fair game.

 

If the headline is a reflection of Apple's attitude... "Apple dismisses DOJ's proposed penalty...."   then I think Apple is in serious trouble and this is only going to get worse for them

post #104 of 121
Frood, where was this competition before Apple entered the market? The fact is Apple leveled the playing field when they entered. Amazon couldn't undercut anyone anymore. The DOJ should not be focused on profits but they should be focused on competition. Amazon's low prices was a barrier to entry.
post #105 of 121
Quote:
Originally Posted by jungmark View Post

Frood, where was this competition before Apple entered the market? The fact is Apple leveled the playing field when they entered. Amazon couldn't undercut anyone anymore. The DOJ should not be focused on profits but they should be focused on competition. Amazon's low prices was a barrier to entry.
 

 

I will agree that Apple did promote a level playing field.  Setting up a system where much higher prices are charged to consumers across the board is certainly 'level'

 

What is the goal of competition?  To drive efficiency.  If one company achieves such a lead in efficiency that it can make profits where others can't, stepping in and artificially raising prices so that the less efficient companies can make a profit and 'compete' is exactly backwards.  And in Apples case its even worse because they are efficient enough that they could have made a profit at $9.99- they just had the clout to say, no we want to make 30% more- and made it happen.

 

 

It's much better for me, the consumer, to be able to buy books for $9.99 from one source than to have my choice of 500 'competitors' all selling me the exact same book at an artificially fixed price of $12.99.  That is not competing, that is rigging.

post #106 of 121
Quote:
Originally Posted by Frood View Post

 

A good argument- but it is backwards.  The DOJ is not responsible for ensuring profits in an industry are so high that many people choose to enter it. 

 

The DOJ is also not responsible for determining what prices should be either. With this court action, they are saying the market price for ebooks is $9.99, or lower. Prices rise and fall depending on market conditions, like a new entrant and different business model for the industry. 

 

Quote:
Originally Posted by Frood View Post

Amazon makes money selling ebooks. 

 

People say this like it is fact. Maybe it is true. I'd like Amazon to report it as such. There's a bit of doubt in my mind as Amazon rarely reports a profit. As such, it's easy for me to see them recouping losses in the "ebooks" division with profits from another division. The DOJ says that ebooks "division" is profitable. But how about showing me instead of telling me.

 

I've got no problems with Amazon selling loss leaders. Highly approve of it.

 

Quote:
Originally Posted by Frood View Post

 

1)  It would likely be much much less than 30%- so even if they did it would be more beneficial to consumers than the market under Apples scheme.

2)  If they did raise their prices the DOJ and consumers would be all over them immediately

3)  With no barriers to entry, if prices were higher, anyone with server infrastructure could immediately get back in the business

 

1) This is baseless speculation. We just don't know. The converse is also unknown. We don't know if Amazon will raise prices either.

 

2) This is baseless speculation. We just don't know. The converse is also unknown. The DOJ could leave them alone.

 

3) This we already see evidence of like with Overstock.com, and Amazon knows how to respond. They'll jack the prices down. As the market leader with a dominant position in one or more markets providing all the revenue, they can absorb losses in other markets and prevent a new market entrant from being successful or entering. In the end, does the gov't want a book market with many players, or a book market dominated by one player?

 

Quote:
Originally Posted by Frood View Post

Apple's scheme was implemented- and prices jumped 30% overnight for the exact same product.

 

1) They were not the same products. Apple sells iBooks files and Amazon sells Kindle files. The content may be the same, but they are not the same product. As long as they aren't interoperable, they are not the same product. As long as they have different features, they are not the same product.

 

2) The prices jumped overnight, but since consumers still had a choice to buy or not buy, the prices of the ebooks moved to something the market would bear; and, as can be seen by the poorly plotted charts, they were moving down, and probably would continued to move down considering all the competition for our time.

 

Quote:

Originally Posted by Frood View Post

What happened to the ebook market? Is it collapsing?  No, competition is actually growing and prices have actually come down to below the starting point.  Google books is becoming a player. 

 

 

Apple made the argument that the result of their market entrance, competition grew with new and better ebook readers, giving people better experiences. The prices were coming down from their initial starting point too. Really, there's no apparent difference in the market behavior between 2010 to 2012 and 2012 and 2013, when the publisher's agency contracts with Apple ended.

 

They only real difference is that tablets have gotten better and cheaper, enabling a wider market for ebooks. This however had zero to do with ebooks.

post #107 of 121
Quote:
Originally Posted by THT View Post

 

1) They were not the same products. Apple sells iBooks files and Amazon sells Kindle files.

And you might add, Apple allows Amazon to sell Kindle files on iOS.

 

(Excellent post, btw).

post #108 of 121
Quote:
Originally Posted by Frood View Post

 

What is the goal of competition?  To drive efficiency.  

 

Quote:

Originally Posted by Frood View Post

 

It's much better for me, the consumer, to be able to buy books for $9.99 from one source than to have my choice of 500 'competitors' all selling me the exact same book at an artificially fixed price of $12.99.  That is not competing, that is rigging.

 

The two quoted statements are not congruent.

 

As for rigging or price fixing, if the price is indeed fixed by the industry at one price, yup that's price fixing, but ebook prices from 2010 to 2012 were not fixed. They were going doing from their starting point, and probably would have continued to go down. Maybe not, I don't know, but the plots provided by the DOJ showed they were going down basically the whole time of the price fixing scheme.

post #109 of 121
Quote:
Originally Posted by Frood View Post

I will agree that Apple did promote a level playing field.  Setting up a system where much higher prices are charged to consumers across the board is certainly 'level'

What is the goal of competition?  To drive efficiency.  If one company achieves such a lead in efficiency that it can make profits where others can't, stepping in and artificially raising prices so that the less efficient companies can make a profit and 'compete' is exactly backwards.  And in Apples case its even worse because they are efficient enough that they could have made a profit at $9.99- they just had the clout to say, no we want to make 30% more- and made it happen.


It's much better for me, the consumer, to be able to buy books for $9.99 from one source than to have my choice of 500 'competitors' all selling me the exact same book at an artificially fixed price of $12.99.  That is not competing, that is rigging.

It's also better if I get ebooks for free. Who says 9.99 is a fair price? How did Apple with 0% market share in ebooks/books have that much power?
post #110 of 121
How much and who did Amazon pay for Justice Dept to take their side?
post #111 of 121
Quote:
Originally Posted by QAMF View Post

The average price of ebooks rose 19%.

http://tidbits.com/article/13912

-QAMF

 

SOME eBooks, not ALL eBooks.

 

The AVERAGE price of ALL eBooks actually fell.

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post #112 of 121
Quote:
Originally Posted by hill60 View Post

 

SOME eBooks, not ALL eBooks.

 

The AVERAGE price of ALL eBooks actually fell.

... Did you read the story?  I believe a few months ago the prices finally returned to the pre-agency model, if that means anything to you.

In addition, the price of "popular" books rose drastically.

As well as hardcover prices and older books.

 

Quote: TidBITS

Once the agency model was in place, ebook prices from those publishers rose immediately. Roughly two weeks after the move, prices at Amazon rose 14.2 percent for new releases, 42.7 percent for New York Times bestsellers, and 18.6 percent overall. Publishers raised prices for their hardcovers as well, to bump them into higher price tiers, and increased prices for their backlist books, older titles that sell relatively few copies each, but which form the long tail of book sales.

Simultaneously, and in a win for the basic economic rule that higher prices result in lower sales, the number of sales dropped by 12 to 17 percent per publisher. In short, customers bought fewer books and paid more per book.

 

Quote: TidBITS

Do publishers and authors earn more money because of these higher prices?

That’s one of the counterintuitive aspects of this situation. Yes, customers paid more — as noted, prices rose nearly 19 percent per book overall after the agency model went into effect.

But publishers earned less per book, with some predicting the overall drop in earnings would be as much as 17 percent. Here’s why. Consider a $29.99 hardcover that Apple would sell for $14.99. The publisher would earn 70 percent of that, or roughly $10.50. But under the wholesale model, the publisher might have sold that book to Amazon for as much as $15. Plus, because publishers were earning less, they also allowed fewer promotions that would have reduced prices for customers.

Since author royalties generally track with publisher earnings, most authors presumably earned less as well, though the specifics undoubtedly varied by contract.

Ironically, the agency model probably caused Amazon to earn more than it was earning under the wholesale model, since it could no longer sell ebooks as loss leaders. But just as the publishers didn’t agree to the agency model in order to earn more money, Amazon wasn’t utilizing the wholesale model because it wanted to earn less. In both cases, the issue was control over pricing.

-QAMF

note: I dislike that Amazon undercuts biz's to try to make them fail.

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post #113 of 121
Quote:
Originally Posted by THT View Post

 

The DOJ is also not responsible for determining what prices should be either. With this court action, they are saying the market price for ebooks is $9.99, or lower. Prices rise and fall depending on market conditions, like a new entrant and different business model for the industry. 

 

 

 

This is just false.  The DOJ just asserted a system to fix high prices would not work.   Anyone is free to undercut Amazons prices.  Similarly Apple is absolutely free to charge $12.99 for an eBook in the differentiated 'Apple format'   Consumers can then choose if they want to buy the Apple formatted book for $12.99, or the Kindle formatted same book for $9.99.   If Apple is able to sell a lot of books that way they will do stunningly well.

 

 

Quote:
Originally Posted by THT View Post

 

 

1) This is baseless speculation. We just don't know. The converse is also unknown. We don't know if Amazon will raise prices either.

 

2) This is baseless speculation. We just don't know. The converse is also unknown. The DOJ could leave them alone.

 

 

 

You are absolutely right, we do not know in either case.  However, we do know the argument people are making against Amazon and we do know the current reality......  'Amazon is selling at a loss so they can eliminate competition and then use their monopoly power to jack prices way up!'   There is absolutely no rule or violation in lowering prices to eliminate competition.  And I'd even agree wholeheartedly-  yep, Amazon prices are so low they eliminated a lot of people that would like to charge more for books.  There *IS* a big problem with using monopoly power to jack prices up.  And we *DO* know that Amazon has not actually done this.  You can not convict them of a future hypothetical crime.   And until they do actually do that, they haven't done anything wrong, so there is nothing for the DOJ to currently go after them for.  You are absolutely right though, we will actually never know if they would or would not have committed the future crime until the future gets here.  And if the day did come when they said "Woohoo" and jacked their prices up overnight, I know I'd be the first to say 'Wow!  Amazon just had the arrogance and gall to think they could get away with jacking prices up across an entire industry.  Sick' em DOJ.  And I'm fairly sure a good number of people on this site would be all for the DOJ going after them too. (But that is pure speculation on my part)

post #114 of 121
I like how everyone argues without including publisher and authors...publishing like every complex business, where everyone in the process gets a small cut of profit. Cheaper ebooks will only drive the current publishers into an eventual meltdown, less money into the pockets of those that creats content. Maybe not now or two year or five year...but if and when everything becomes digital consumption then it will happen. The question is can anyone look back and undo what damages DOJ created here?
post #115 of 121
Quote:
Originally Posted by Techboy View Post

I like how everyone argues without including publisher and authors...publishing like every complex business, where everyone in the process gets a small cut of profit. Cheaper ebooks will only drive the current publishers into an eventual meltdown, less money into the pockets of those that creats content. Maybe not now or two year or five year...but if and when everything becomes digital consumption then it will happen. The question is can anyone look back and undo what damages DOJ created here?

 

Yes, the traditional big publishers are pretty much toast. They did it to themselves.

 

1. They saw the music industry get blindsided by digitization. It was inevitable for books to be in the same boat. This was over 10 years ago, and they had a long time to do something.

 

2. They knew Amazon was going to eat them alive, yet they became dependent on them, and didn't have the guts to break free. Amazon is notorious for getting the steepest discounts for wholesale book prices anywhere, and probably had a MFN on those discounted prices to boot. On top of that, they operated under a 4% to 9% no-sales tax advantage, and continue to this day in same states.

 

3. They couldn't transform themselves from a paper-based business to a digital one. They were not willing to cannibalize their paper-based business model, and continue to this day to hold onto them. eBooks could have been the vector for them to get out from under Amazon's yoke. It still could be, but it's not looking good that they are willing.

 

4. The text book makers are even in deeper doodoo. 

 

As for the authors, I think they'll be ok. Like with software developers and app stores vs boxed software, there's going to be a period of adjustment, but I think they'll be ok. It is going to be this way regardless of the DOJ action.

post #116 of 121
Quote:
Originally Posted by Frood View Post

 

This is just false.  The DOJ just asserted a system to fix high prices would not work.

 

 

I'm asserting the DOJ doesn't understand the market forces involved, and are doing a disservice to consumers by choosing to go through this particular action. 

 

1. Prices were not fixed. Prices were reset to a higher initial value yes, but they were subject to market forces and they came down. Didn't you see the graph by the DOJ? The one where there is a spike in the book prices? Sure, that is "price fixing" for all of about 1 month. The prices dropped immediately afterward, and continued to drop through time. If prices were fixed, why did they drop? 

 

The prices spiked up because their was a new "powerful" entrant in the ebook market - which in the ebook world finally become viable with a tablet, a reader application and the content the reader application displays in 2007, which is totally unlike a paper based book - and different business model for selling things. This is the market at work on a nascent business.

 

2. That business model, agency model, moved the pricing power from the retailer to the publisher and content providers. App developers control the pricing of their apps, their digital good, and the "retailer" (app store) charges a fee for providing a user and performing a money transaction for 5 years now. In this model, the retailer is nothing but a fancy billboard and a cash register. This is the digital world, and I question if the DOJ understands it as they refer reverently to the centuries old business of wholesaling of physical goods. In a digital world, supply is basically infinite. In a digital world, customers have market powers heretofore unseen in the physical goods markets. (There's an obvious conclusion when there is infinite supply with low demand, and why those fixed prices started dropping so quickly). Why exactly is the DOJ messing around with this, especially using a system of laws based on centuries physical goods markets?

 

In the court case, and the remedies already enacted and proposed, the DOJ is buttressing wholesaling as the right business model, and therefore preserving "price" competition. That's insane imo. Go to point 3.

 

3. The DOJ seems to think the ebook market is centuries old. It's not. It's only about 6 years old, and the digital goods market is maybe 15 years old, maybe 20. What's the last real innovation in the physical book market? The mass market paperback book? About a century old if not older. The DOJ is applying laws based on physical goods onto a digital market. That's just lunacy. Tablet zero, the first real ebook reader, appear in 2007 for $400. Over the span of 5 years, the price of that tablet reader went down by nearly an order of magnitude. Competitors arrived. An incidental competitor arrived that offered color, motion, etc ebooks as a "feature" of their device, not even its primary purpose. Over that time span, computational power of these devices basically increased 32-fold, prices dropped at the same time, and units went from 1m to 100m, basically all them capable of storing most of the contents of the library of Congress in them or having access to almost every single book in digital form. This happened in 5 years! There's no way normalcy has occurred yet.

 

Redundancy alert, an ebook is digital. The digital world nukes the idea of author->publisher->retailer->customers and wholesale. What risk is a wholesaler retailer taking with wholesaling an ebook? Especially a computing power like an Apple, Amazon, Google, etc? Virtually nothing, so why is it they the ones that need to control prices? The idea of a wholesale digital good is crazy, and the eventuality of the market is going to be agency. Content provider provides content. They control the price. "Price competition" is not an entity to be controlled. Prices will rise or fall in accordance with demand and quality, only difference is that the "retailer" isn't the one controlling prices, but content providers. 

 

Yet, the DOJ is saying the business model of choice is wholesale for ebooks? That's nuts. They have no business doing anything in this market until it matures. They have no business saying a certain model is good or not. They have no business saying who controls prices in such a young market.

 

Quote:
Originally Posted by Frood View Post

 

You are absolutely right, we do not know in either case.  However, we do know the argument people are making against Amazon and we do know the current reality......  'Amazon is selling at a loss so they can eliminate competition and then use their monopoly power to jack prices way up!' 

 

Buck up mean. I agree with you that this line of thought is crazy. Too many people are using this as an argument, and right now, it's seem obvious that Amazon will continue to offer, low discounted prices for the foreseeable future. My problem is stagnation. Anytime there is a dominant, monopolist player controlling the market, it results in stagnation. The gov't is defacto supporting Amazon, the dominant player. The proposed remedy from the DOJ on Apple basically fails the appearance of impropriety test, but I digress.

 

You want conflict. You want infinite diversity in infinite combination (stole that from Star Trek!). As you say, you want competition. The "ebook" market was in, is in intense competition. By all appearances, the gov't is supporting Amazon, the dominant player, using a set of rules developed from a centuries old market to change a totally different market which operates under different conditions, and one in rapid transition boot.

post #117 of 121
Quote:
Originally Posted by Mac Bear View Post

Amazon is allowed to sell product at such a low price that it is losing money every quarter. And doing so if kills its competitors (good bye Broders, Barnes and Nobles being the next). Consumer may be happy to see lower prices in a short term. In the longer term wham only Amazon will have survived it will be another story.

Add Geeks.com to the list. They shuttered door pointing finger at amazon.com. See their web site.
Now looks like overstock.com is going nuclear on Amazon on books. Promising to undercut amazon by 10% on any book overstock sells. Even if that means driving the price to 9 cents. Go kill each other boys.
"Building for the future?! They should be running around reacting to the present!" -John Moltz
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"Building for the future?! They should be running around reacting to the present!" -John Moltz
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post #118 of 121
Quote:
Originally Posted by Frood View Post

A good argument- but it is backwards.  The DOJ is not responsible for ensuring profits in an industry are so high that many people choose to enter it.  I do not make PC's for a living, because prices are too low and I don't believe I could make a lot of money doing it.  Is it the DOJ's job to go after PC manufacturers and ensure they drive prices way up so that I can start making them?  No.

PC's have open standards that have driven prices way down and many people who used to make PC's no longer do.  They could not compete.

Amazon makes money selling ebooks.  They do sell some titles below cost.  That is allowed.  Amazons prices are low and many people are finding they do not want to or simply can not compete.  That is fine.  They hypothetically proposed danger often used is that Amazon would eliminate all competition and then jack book prices sky high with their monopoly.  The problem with that argument is that
1) it did not happen and 2) it could not happen.  That scenario only can occur in industries with high barriers to entry-like Steel or semiconductor manufacturing. 

If Amazon did mysteriously jack prices up overnight:

1)  It would likely be much much less than 30%- so even if they did it would be more beneficial to consumers than the market under Apples scheme.
2)  If they did raise their prices the DOJ and consumers would be all over them immediately
3)  With no barriers to entry, if prices were higher, anyone with server infrastructure could immediately get back in the business

Apple's scheme was implemented- and prices jumped 30% overnight for the exact same product.
The DoJ stepped in.
What happened to the ebook market? Is it collapsing?  No, competition is actually growing and prices have actually come down to below the starting point.  Google books is becoming a player.  Apple books is a player and even making money selling titles for $7.99  Are all these companies competing to see who can lose the most money?  Nope.  They are making money.  Obviously Apple would be much happier to game the system and charge consumers nearly double that, but they got caught and thwarted.

I do think the DOJ's proposed terms are overreaching.  They need to determine damages (and it is substantial- driving prices up 30% for the entire book market for a substantial period is not a small thing).  The DOJ could opt to triple damages because the intent was willful- but I think even that would be borderline.  The other option would be to allow the doors to swing open and let states and consumers sue individual or via class action similar to what they did with tobacco companies. 

Telling Apple how to run their business is overreaching.  Telling them they can't engage in certain behaviors is fair game.

If the headline is a reflection of Apple's attitude... "Apple dismisses DOJ's proposed penalty...."   then I think Apple is in serious trouble and this is only going to get worse for them

Apple's scheme?

Barnes and Noble testified that they were negotiating an agency model with the publishers before Apple even came on the scene, testimony the judge apparently ignored by declaring Apple the "leader".
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Better than my Bose, better than my Skullcandy's, listening to Mozart through my LeBron James limited edition PowerBeats by Dre is almost as good as my Sennheisers.
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post #119 of 121
Welcome to United Socialist State of America (USSA) where government try to operate business by themselves. They think they know better how price of goods should be and try dictate people to produce and sell in their way.
Some says they will fall like USSR in the future, I don't believe that but now I'm in doubt.
post #120 of 121
I can already easily compare price on the bookstores for iBooks, Kindle, and Nook. I don't bother with Nook much because either in iBookstore or Amazon Kindle have most titles I have sought. As readers go, I think Kindle and Nook are inferior to iBooks. I only wish iBooks had more titles. I don't see how the DOJ's penalties achieve this. The DOJ obviously doesn't understand the ebook market. Let's hope that Apple appeal is successful.
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